Subordinate Debenture interest default



    CALGARY, July 31 /CNW/ - Birch Mountain Resources Ltd. ("Birch Mountain"
or the "Company") (BMD: TSX and AMEX) today announced that it was not able to
make the semi-annual payment of interest due on June 30, 2008, on its
Convertible Unsecured Subordinate Debentures (the "Debentures") prior to the
expiry of the default curative period on July 30, 2008. As disclosed in the
news release dated July 3, 2008, as a consequence of the Company being in
breach of a financial covenant under its senior secured credit facility, the
Lender, Tricap Partners Ltd., has exercised its right under the loan agreement
to direct The Trustee, Computershare Trust Company of Canada, not to make the
scheduled interest payment on the Debentures until further notice from the
Lender. The Trustee has issued a notice of default to the Company under the
trust indenture.
    As a consequence, the Trustee may, on behalf of the holders of the
Debentures (the "Holders"), declare the principal amount and the accrued
amount of interest to be due and payable. Alternatively, the Trustee may waive
the Event of Default upon such terms and conditions that the Holders may
prescribe. The principal amount of the Debentures is $34,500,000. The amount
of interest due as of June 30, 2008, was $1,035,000.
    As previously announced on July 22, 2008, the Company is pursuing an
immediate and focused sale process to maximize value. In the event this
immediate sales process does not achieve an acceptable price, the Company
intends to work with its stakeholders to recapitalize the balance sheet to
improve liquidity and permit delivery of the business plan.

    Forward Looking Statements: This news release contains certain
forward-looking statements. All statements, other than statements of
historical fact, included herein, including without limitation, statements
regarding resources and reserves, exploration and development plans and
results, anticipated capital expenditures and financing thereof, anticipated
outcomes and timing of regulatory applications and approvals and the future
plans and objectives of Birch Mountain are forward-looking statements that
involve various risks and uncertainties. There can be no assurance that such
statements will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements. Certain
amounts in the financial statements are based on estimates using the best
currently available information and assumptions of management. Important
factors that could cause actual results to differ materially from Birch
Mountain's expectations are disclosed elsewhere in documents that are
available to the public at www.sedar.com and www.sec.gov.

    %SEDAR: 00003909E




For further information:

For further information: Company Contacts: Birch Mountain, Tel. (403)
262-1838, Fax (403) 263-9888; Steve Chizzik, Equity Communication, Tel. (908)
688-9111, Website: www.birchmountain.com

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BIRCH MOUNTAIN RESOURCES LTD.

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